What can western entrepreneurs learn from East African startups?

From local-sourcing and utility models to investing in growth,Quinton Wall reflects on a trip to East Africa’s startup scene.

Photograph: Alamy

Earlier this year I was fortunate enough to visit East Africa, specifically Kenya and Uganda, to meet with local entrepreneurs in the region. My job in San Francisco means that I often visit many of the major tech hubs around the world, but still, I was not prepared for the amount of inspiration I got from my trip to Africa.

To put it mildly, the entrepreneurial flair in the region is electric. Opportunity is as fertile as the red soil of the land underfoot, waiting to be harvested. So what can western entrepreneurs learn from this rapidly emerging region?

Focus on growth

It is clear that mobile is leading the way across Africa, and like many emerging countries, they skipped right past the cable infrastructure that tethers much of western country communication to expensive and aging technology.

One technology hub I visited, the m:lab, was full of state-of-the-art mobile devices and teeming with eager mobile app developers. However, these entrepreneurs weren’t just being taught how to build more apps, they were being taught how to build growth businesses. Before you can graduate from the m:lab, students must register a business, bring their product to market and show at least six months of growth.

This focus on rapid growth was inspiring. Investors are harder to come by in this region, so entrepreneurs are forced to look at how every decision, whether it is product or personnel-related, affects the business in its earliest stages.

West-sourcing v local-sourcing

Nairobi benefits the most from western investment. It is truly a city on the verge of greatness, but this attention from foreign companies comes at a price. Many of the entrepreneurs I met in Nairobi were westerners who saw an opportunity and quickly set up shop. As these companies grew, they hired local staff, which is fantastic for the local economy, but I couldn’t help but feel that this emphasis on west-sourcing is only good in the short term. For a region heavily influenced by colonial rule, independence and national identity are powerful motivators.

Kampala, the capital of Uganda, is a great example of where I believe local-sourcing will serve the country and economy well in the long term. Kampala often misses out on foreign investment to Nairobi. The result is a heavy investment in local skills training and a very tight entrepreneur community, where everyone knows everyone and is willing to help out. They are the underdogs. They have everything to lose.

The importance of local-sourcing anywhere in the world cannot be underestimated. There will always be magnets of tech investment that draw foreign attention, but every one of these tech hubs started with friends helping friends, and locals helping locals – just look at the lineage of almost every software or hardware company in Silicon Valley.

It begins with utilities

Entrepreneurs that I met with during my time in East Africa were heavily focused on building basic utility services: communication, money transfer, social good projects and healthcare, for example. By developing utility services, even the most remote communities benefit from the influx of technology and investment – foreign or local.

With such a large rural population in East Africa, these utility services can quickly become the new normal. m-Pesa is probably the most notable example. The microfinance platform now manages the transfer of roughly 31% of the Kenyan GDP through mobile phones – never touching a bank!

Western entrepreneurs can learn a lot from the East African utility model. Studying the economy of a desired market is a sensible approach, deciding whether basic services are required first, or if the community is ready for convenience services such as social networking, lifestyle (news, travel, music, shopping) or business apps (track a package, check invoices etc). Of course, even within established countries, disruptive ideas that reimagine basic services can be the next killer technology – just ask Square or Twitter.

Now it’s your turn

If my time in East Africa taught me anything, it is the realisation that wherever there is opportunity, there are creative individuals we collectively refer to as entrepreneurs who thrive on building something out of nothing. Whether growing a hot startup in downtown San Francisco, studying computer science in Hyderabad, or selling fresh produce at a local farmer’s market, the learnings from my time in East Africa always apply: focus on a business model designed for growth, invest locally, and if utility services either don’t exist or are ready for disruption, (re)invent them.

Quinton Wall is director of technical platform marketing at salesforce.com

About Alexander GordinAn international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development.
Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries.
Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices.
Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries.
Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise.
Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development.
Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU.
Specialties
Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason